Emergency Funds are Multiplying. Will They Last as Long as the Outbreak?

As Inside Philanthropy wrote just a few days ago, community foundations and local funders around the country have been scrambling to respond as COVID-19 shuts down one aspect of society after another. Funders across the country voiced the same concern: Swift action is needed to ensure the continued operation of the nonprofits that serve the most vulnerable members of their communities. For a lot of people who depend on the services of frontline nonprofits for essential health and other basic needs, the pandemic represents an immediate danger.

A rare piece of good news is that less than a week after the first few COVID-19 response funds were announced, the total number is more than 100 and rising, according to philanthropy industry sources tracking the funds. The National Center for Family Philanthropy started hosting an interactive map of local COVID-19 funds on its website, along with national and international funds. In addition, the Community Foundation Public Awareness Initiative is compiling a list of COVID-19 response funds by community foundations. Both are updated as new funds are announced.

Community Foundations in the Lead

Most of the funds were assembled under the aegis of community foundations that tend to have the best understanding of the various services provided throughout their regions, with startup money kicked in first by major area foundations and businesses, followed by individuals once the funds are announced.

For example, the Pittsburgh Foundation recently launched its Emergency Action Fund with $4 million from the Heinz Endowments, the Richard King Mellon Foundation and the Hillman Family Foundations. Local individuals and businesses added $850,000; other foundation commitments will add another $6 million.

“Through the last couple of weeks, our program team has been reaching far and wide to take inventory from grantees in the region to see where the needs are,” said Lisa Schroeder, president and CEO of the Pittsburgh Foundation. The foundation is working with the Allegheny County Health Department and the Department of Human Services to assess needs in the area. That public-private-nonprofit model characterizes the way we’ve seen these community response funds emerge, such as the Seattle Foundation COVID-19 Response Fund that we reported this week.

You can read a broader analysis of how philanthropy should respond to the pandemic in an Inside Philanthropy post by guest contributor Lori Bezahler. She lays out strategies to speed the delivery of funds to the programs and people who need them, including the conversion of funding to unrestricted general operating support, and the removal or reduction of application and reporting requirements, among other measures.

That these COVID-19 response funds were assembled so rapidly speaks to how this dislocating emergency has raised awareness of the fragility of the systems we all depend on. “It's the universality,” said Nicholas A. Tedesco, president and CEO of NCFP. “This crisis is distinct from most other natural disasters. Most natural disasters are quite isolated, but this crisis is affecting everyone around the world. People can empathize.”

But What if the Need Continues?

Community and local funders may have to make another difficult calculation as they disburse funds: how much not to give. During these early weeks of heightened response to the pandemic, organizations moved quickly to fund and launch these COVID-19 response funds. But if the situation stays at the current emergency level for month after month—a likely scenario—support for the funds may not keep pace. Funders will have to think of the long-term sustainability of these COVID-19 responses, possibly by withholding the flow of funds; they will also have to consider how to maintain the empathy and commitment fueling this initial wave of giving.

Right now, there are a lot of unanswered questions about how things will play out. Will the massive federal bailout legislation now coming together in Washington include aid for nonprofits, as many are advocating? Will wealthy major donors sustain or expand their giving even as they take a massive hit in the stock market? Will institutional foundations increase their payout rates, dipping into endowments to meet emergency needs?

On that last question, it’s still too early to say, but calls are mounting to put aside normal, conservative limits on foundation grantmaking to meet the demands of a global emergency. Yesterday, for example, Phil Buchanan, who leads the Center for Effective Philanthropy, had this advice to funders: “If yours is a perpetual foundation, you have literally forever to get back to whatever your endowment was at its peak—which really wasn’t ever the most relevant number anyway! Step up your payout now before it's too late for your grantees.”